Temu has become the second company to be hit with a DSA fine since it came into force in late 2022, second only to X which was hit with a €120 million fine.
The European Union has slapped Chinese online retailer Temu with a €200 million (about $232 million) fine for systematically failing to stop illegal and dangerous products — like faulty chargers and hazardous toys — from reaching European consumers.
It is the largest penalty ever issued under the European Union’s Digital Services Act (DSA), Temu’s tab isn’t closed yet. The investigation is still open, and Temu is still under scrutiny.
If the fine seems large, that’s because the goods in question pose a serious safety risk. These include dangerous baby toys and defective phone chargers.
The EU Commission conducted an independent mystery shopping exercise, purchasing items directly through Temu and submitting them for laboratory testing. A high percentage of chargers failed basic electrical safety standards, and a high proportion of baby toys posed medium-to-high safety risks, containing chemicals above EU legal limits, including phthalates, and featuring small detachable parts that present suffocation hazards.
Rather than penalizing Temu for each individual unsafe product, regulators found that Temu's risk assessment from October 2024 was inaccurate and may have led to inadequate mitigation measures against the dissemination of illegal products.
The platform was also criticized for how its design, including recommendation systems and product promotion programs involving affiliated influencers, could increase the spread of illegal products.
Temu now has approximately 130 million users across the EU. The €200 million penalty equals around 0.4% of the global turnover reported last year by parent company PDD Holdings. Under the DSA, the maximum exposure is 6% of annual global revenue, meaning far heavier fines remain on the table.
The fine was imposed amid stricter import regulations and customs controls on low-cost packages from China. European regulators have focused primarily on platforms such as Temu and Shein.
The case is meant to be a precedent for how large online marketplaces operate their fronts and if it’s in compliance with the spirit of DSA. The Commission said the case has not been fully closed, with other parts of the investigation into Temu still ongoing, including those concerning the distribution of illegal products, recommendation systems, and so-called addictive design practices. That strand of the case targets the architecture of the platform itself: the psychological mechanics that keep users scrolling, spinning, and buying.
Temu, in its defense, said that the fines were “disproportionate” as the decision relates to its first DSA assessment in 2024 and “does not reflect the current state of [its] systems." having "engaged constructively" to "strengthen risk assessment, platform governance and user protection."
"We will continue to engage with regulators in good faith and work toward a marketplace that serves consumers, businesses, and communities responsibly," they added. "We are reviewing the decision carefully and considering all available options."
Temu must submit a detailed action plan to the Commission by August 28, outlining precisely how it will bring its risk-assessment practices into conformity with the DSA.
